Gladstone Investment Corporation Reports Financial Results for the Fiscal Year and Quarter Ended March 31, 2008

-- Net Investment Income for the year ended March 31, 2008 was $13.1 million, or $0.79 per common share and for the quarter ended March 31, 2008 was $3.4 million, or $0.21 per common share

-- Net Decrease in Net Assets Resulting From Operations for the year was $0.9 million, or $0.06 per common share and for the quarter ended March 31, 2008 was $10.0 million, or $0.60 per common share

MCLEAN, Va.--(BUSINESS WIRE)--

Gladstone Investment Corp. (NASDAQ:GAIN) (the "Company") today announced earnings for the fourth quarter and fiscal year ended March 31, 2008. All per share references are per basic and diluted weighted average common share outstanding, unless otherwise noted.

Net Investment Income for the year ended March 31, 2008 was $13,051,550, or $0.79 per share compared to Net Investment Income for the year ended March 31, 2007 of $11,147,732, or $0.67 per share. For the three months ended March 31, 2008 Net Investment Income was $3,422,242, or $0.21 per share compared to $2,784,614, or $0.17 per share for the same period a year ago.

Net Decrease in Net Assets Resulting from Operations for the year ended March 31, 2008 was $941,161, or $0.06 per share compared to the Net Increase in Net Assets Resulting from Operations of $7,268,404, or $0.44 per share for the year ended March 31, 2007. The Net Decrease in Net Assets Resulting from Operations for the three months ended March 31, 2008 was $9,953,471, or $0.60 per share compared to the Net Increase in Net Assets Resulting from Operations of $458,769, or $0.03 per share for the three months ended March 31, 2007. The primary reason for the decrease in net assets for both the quarter and fiscal year end is directly related to the unrealized depreciation adjustments the Company recorded in the fourth quarter as a result of the devaluation in our overall investment portfolio.

Total assets were $352,293,092 at March 31, 2008 as compared to $323,590,215 at March 31, 2007. Net asset value was $12.47 per actual common share outstanding at March 31, 2008 as compared to $13.46 per actual common share outstanding at March 31, 2007.

The weighted average yield on our portfolio of investments, excluding cash and cash equivalents, was 8.91% for the year ended March 31, 2008 compared to 8.72% for the year ended March 31, 2007. The annualized weighted average yield on the Company's portfolio for the three months ended March 31, 2008 was 8.42% compared to 8.72% for the three months ended March 31, 2007.

During the fourth quarter ended March 31, 2008, the Company recorded the following activity:

    --  Invested approximately $10.6 million in senior debt, common
        stock and common stock warrants in Mathey Investments, Inc.;
        and

    --  Sold ten syndicated loan participations for approximately
        $16.5 million, realizing an aggregate net loss of
        approximately $2.2 million on the transactions.

At March 31, 2008, the Company held 43 non-control/non-affiliate investments, six control investments and three affiliate investments, totaling an aggregate cost basis of approximately $351 million and a fair value of approximately $336 million.

                  Condensed Schedule of Investments
                            March 31, 2008
Investment Type                                  Cost      Fair Value
----------------------------------------------------------------------
Total Non-Control/Non-Affiliate Investments  $166,416,086 $142,739,216
Total Control Investments                     138,353,930  145,406,928
Total Affiliate Investments                    46,034,721   47,457,910
                                             -------------------------
Total Investments                            $350,804,737 $335,604,054
                                             =========================

"Our investing activity continues to include proprietary investments and co- investments in support of equity sponsors. We are also expanding our efforts in the control investment category," said Chip Stelljes, Co-Vice Chairman and Chief Investment Officer.

    Subsequent to March 31, 2008, the Company:

    --  Successfully sold all 5,520,033 million shares associated with
        the transferable rights offering for net proceeds of
        approximately $41 million;

    --  Invested approximately $5.7 million in one new investment;

    --  Sold nine of its syndicated loan participations totaling
        approximately $13.2 million, realizing an aggregate net loss
        of approximately $1.7 million on the transactions;

    --  Declared monthly cash dividends of $0.08 per common share for
        each of the months of April, May and June of 2008.

The Company will hold a conference call on Thursday, May 22, 2008 at 8:30 am EDT to discuss fourth quarter and fiscal year financial results. Please call (877) 407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions.

A replay of the conference call will be available through June 22, 2008. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 284214. The replay will be available approximately two hours after the call concludes.

The live audio broadcast of Gladstone Investment's quarterly conference call will be available online at www.GladstoneInvestment.com and www.investorcalendar.com. The online replay will follow shortly after the call and will be available through June 22, 2008.

Gladstone Investment Corporation is an investment company that seeks to make debt and equity investments in small and mid-sized private businesses in the U.S. in connection with acquisitions, changes in control and recapitalizations. For more information please visit our website at http://www.GladstoneInvestment.com.

    For further information contact Kerry Finnegan at 703-287-5893.

This press release may include statements that may constitute "forward-looking statements," including statements with regard to the future performance of the Company. Words such as "should," "believes," "feel," "expects," "projects," "strive," "goals," and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements include, among others, those factors listed under the caption "Risk factors" of the Company's Annual Report on Form 10-K for the year ended March 31, 2008, as filed with the SEC on May 21, 2008. The risk factors set forth in the Form 10-K under the caption "Risk Factors" are specifically incorporated by reference into this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                   GLADSTONE INVESTMENT CORPORATION
                CONSOLIDATED STATEMENTS OF OPERATIONS
                             (UNAUDITED)

                                 Three months ended Three months ended
                                   March 31, 2008     March 31, 2007
                                 ------------------ ------------------

INVESTMENT INCOME
  Interest income
    Non-Control/Non-Affiliate
     investments                 $       3,354,365  $       2,634,567
    Control investments                  2,725,237          1,775,004
    Affiliate investments                  783,892            420,961
    Cash and cash equivalents               23,119             51,141
                                 ------------------ ------------------
    Total interest income                6,886,613          4,881,673
  Other income                               6,768              3,229
                                 ------------------ ------------------
      Total investment income            6,893,381          4,884,902
                                 ------------------ ------------------

EXPENSES
  Base management fee                      492,651            198,679
  Loan servicing fee                     1,272,421          1,060,163
  Administration fee                       208,346            162,244
  Interest expense                       1,914,821            538,913
  Amortization of deferred
   finance costs                           138,663            142,387
  Professional fees                         60,172            231,703
  Stockholder related costs                 47,301             85,974
  Insurance expense                         48,422             61,406
  Directors fees                            54,708             53,800
  Taxes and licenses                        43,815             28,879
  General and administrative
   expenses                                 66,215             38,498
                                 ------------------ ------------------
      Expenses before credit
       from Adviser                      4,347,535          2,602,646
                                 ------------------ ------------------
  Credits to base management fee          (876,396)          (502,358)
                                 ------------------ ------------------
      Total expenses net of
       credit to base management
       fee                               3,471,139          2,100,288
                                 ------------------ ------------------
NET INVESTMENT INCOME                    3,422,242          2,784,614
                                 ------------------ ------------------

REALIZED AND UNREALIZED GAIN
 (LOSS) ON INVESTMENTS
  Realized loss on sale of Non-
   Control/Non-Affiliate
   investments                          (2,213,942)           (92,906)
  Net unrealized (depreciation)
   appreciation of Non-
   Control/Non-Affiliate
   investments                         (12,605,949)           627,501
  Net unrealized appreciation
   (depreciation) of Control
   investments                             397,358         (2,872,940)
  Net unrealized appreciation of
   Affiliate investments                 1,104,703             12,500
  Net unrealized depreciation on
   derivative                              (57,883)                 -
                                 ------------------ ------------------
      Net loss on investments          (13,375,713)        (2,325,845)
                                 ------------------ ------------------


NET (DECREASE) INCREASE IN NET
 ASSETS RESULTING FROM
 OPERATIONS                      $      (9,953,471) $         458,769
                                 ================== ==================

NET (DECREASE) INCREASE IN NET
 ASSETS RESULTING FROM
 OPERATIONS PER COMMON SHARE:
    Basic and Diluted            $           (0.60) $            0.03
                                 ================== ==================

SHARES OF COMMON STOCK
 OUTSTANDING:
    Basic and diluted weighted
     average shares                     16,560,100         16,560,100

                   GLADSTONE INVESTMENT CORPORATION
                CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       For the period
                                                       June 22, 2005
                                                      (Commencement of
                          Year Ended     Year Ended    Operations) to
                        March 31, 2008 March 31, 2007  March 31, 2006
                        -------------- -------------- ----------------

INVESTMENT INCOME
  Interest income
    Non-Control/Non-
     Affiliate
     investments        $  14,574,832  $   9,572,593  $     2,450,906
    Control investments    10,768,484      5,486,060          255,059
    Affiliate
     investments            2,285,836        535,629                -
    Cash and cash
     equivalents              216,732      1,661,647        4,434,706
                        -------------- -------------- ----------------
    Total interest
     income                27,845,884     17,255,929        7,140,671
  Other income                 47,596          5,707          230,185
                        -------------- -------------- ----------------
      Total investment
       income              27,893,480     17,261,636        7,370,856
                        -------------- -------------- ----------------

EXPENSES
  Base management fee       1,802,602      2,413,116          915,360
  Loan servicing fee        5,013,503      1,568,854                -
  Administration fee          855,086        526,595          288,471
  Interest expense          7,733,385        607,661              378
  Amortization of
   deferred finance
   costs                      734,195        233,779                -
  Professional fees           416,348        586,028          163,369
  Stockholder related
   costs                      267,613        273,483           89,563
  Insurance expense           231,211        262,339          184,642
  Directors fees              231,689        208,100          160,000
  Taxes and licenses          168,833        168,873          195,270
  General and
   administrative
   expenses                   196,336        142,659           44,494
                        -------------- -------------- ----------------
      Expenses before
       credit from
       Adviser             17,650,801      6,991,487        2,041,547
                        -------------- -------------- ----------------
  Credits to base
   management fee          (2,808,871)      (877,583)        (554,589)
                        -------------- -------------- ----------------
      Total expenses
       net of credit to
       base management
       fee                 14,841,930      6,113,904        1,486,958
                        -------------- -------------- ----------------
NET INVESTMENT INCOME      13,051,550     11,147,732        5,883,898
                        -------------- -------------- ----------------

REALIZED AND UNREALIZED
 (LOSS) GAIN ON
 INVESTMENTS
  Realized (loss) gain
   on sale of Non-
   Control/Non-
   Affiliate
   investments             (2,411,654)       (93,850)          57,431
  Net unrealized
   (depreciation)
   appreciation of Non-
   Control/Non-
   Affiliate
   investments            (23,277,742)      (562,097)         162,968
  Net unrealized
   appreciation
   (depreciation) of
   Control investments     10,338,879     (3,235,881)         (50,000)
  Net unrealized
   appreciation of
   Affiliate
   investments              1,410,689         12,500                -
  Net unrealized
   depreciation on
   derivative                 (52,883)             -                -
                        -------------- -------------- ----------------
      Net (loss) gain
       on investments     (13,992,711)    (3,879,328)         170,399
                        -------------- -------------- ----------------


NET (DECREASE) INCREASE
 IN NET ASSETS
 RESULTING FROM
 OPERATIONS             $    (941,161) $   7,268,404  $     6,054,297
                        ============== ============== ================

NET (DECREASE) INCREASE
 IN NET ASSETS
 RESULTING FROM
 OPERATIONS PER COMMON
 SHARE:
    Basic and Diluted   $       (0.06) $        0.44  $          0.37
                        ============== ============== ================

SHARES OF COMMON STOCK
 OUTSTANDING:
    Basic and diluted
     weighted average
     shares                16,560,100     16,560,100       16,391,589

                   GLADSTONE INVESTMENT CORPORATION
          CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


                                             March 31,     March 31,
                                               2008          2007
                                           ------------- -------------

ASSETS
Non-Control/Non-Affiliate investments
 (Cost 3/31/08: $166,416,086; 3/31/07:
 $138,567,741)                             $142,739,216  $138,168,612
Control investments (Cost 3/31/08:
 $138,353,930; 3/31/07: $116,302,372)       145,406,928   113,016,491
Affiliate investments (Cost 3/31/08:
 $46,034,721; 3/31/07: $19,750,000)          47,457,910    19,762,500
                                           ------------- -------------
Total investments at fair value (Cost
 3/31/08: $350,804,737; 3/31/07:
 $274,620,113)                              335,604,054   270,947,603
Cash and cash equivalents                     9,360,154    37,788,941
Interest receivable                           1,661,724     1,306,090
Prepaid insurance                                90,521        83,819
Deferred finance costs                          323,547       627,960
Due from Custodian                            4,399,016    12,694,985
Due from Adviser                                 89,401        20,383
Other assets                                    764,675       120,434
                                           ------------- -------------
TOTAL ASSETS                               $352,293,092  $323,590,215
                                           ============= =============

LIABILITIES
Due to Administrator                       $    208,346  $    162,244
Borrowings under line of credit             144,834,500   100,000,000
Accrued expenses                                716,107       523,698
Other liabilities                                89,190        85,764
                                           ------------- -------------
Total Liabilities                           145,848,143   100,771,706
                                           ------------- -------------
NET ASSETS                                 $206,444,949  $222,818,509
                                           ============= =============

ANALYSIS OF NET ASSETS:
Common stock, $0.001 par value,
 100,000,000 shares authorized and
 16,560,100 shares issued and outstanding  $     16,560  $     16,560
Capital in excess of par value              224,172,532   226,553,515
Net unrealized depreciation of investment
 portfolio                                  (15,200,683)   (3,672,510)
Net unrealized depreciation of derivative       (52,883)            -
Accumulated net investment income                18,200        18,067
Accumulated net realized loss                (2,508,777)      (97,123)
                                           ------------- -------------
TOTAL NET ASSETS                           $206,444,949  $222,818,509
                                           ============= =============
Net assets per share                       $      12.47  $      13.46
                                           ============= =============

                   GLADSTONE INVESTMENT CORPORATION
                  CONSOLIDATED FINANCIAL HIGHLIGHTS
                             (UNAUDITED)

                                 Three months ended Three months ended
                                   March 31, 2008     March 31, 2007
                                 ------------------ ------------------
Per Share Data (1)
--------------------------------
  Balance at beginning of period     $      13.31       $      13.65

  Income from investment
   operations:
    Net investment income (2)                0.21               0.17
    Realized loss on sale of
     investments (2)                        (0.13)             (0.01)
    Net unrealized depreciation
     of investments (2)                     (0.68)             (0.13)
                                 ------------------ ------------------
  Total from investment
   operations                               (0.60)              0.03
                                 ------------------ ------------------
    Distributions (3)                       (0.24)             (0.22)
                                 ------------------ ------------------
  Net asset value at end of
   period                            $      12.47       $      13.46
                                 ================== ==================

  Per share market value at
   beginning of period               $       9.81       $      15.31
  Per share market value at end
   of period                                 9.41              14.87
  Total Return (4)                          (1.77%)            (1.41%)
  Shares outstanding at end of
   period                              16,560,100         16,560,100

  Statement of Assets and
   Liabilities Data:
--------------------------------
  Net assets at end of period        $206,444,949       $222,818,509
  Average net assets (5)             $214,143,553       $223,372,272

  Senior Securities Data:
--------------------------------
  Borrowings under line of
   credit                            $144,834,500       $100,000,000
  Average coverage ratio (6)                  243%               324%
  Average coverage per unit (7)      $      3,513       $      3,228

  Ratios/Supplemental Data
--------------------------------
  Ratio of expenses to average
   net assets (8) (9)                        8.12%              4.66%
  Ratio of net expenses to
   average net assets (8) (10)               6.48%              3.76%
  Ratio of net investment income
   to average net assets (8)                 6.39%              4.99%

(1)  Based on actual shares outstanding at the end of the
      corresponding period.
(2)  Based on weighted average basic per share data.
(3)  Distributions are determined based on taxable income calculated
      in accordance with income tax regulations which may differ from
      amounts determined under accounting principles generally
      accepted in the United States of America.
(4)  Total return equals the change in the market value of the
      Company's common stock from the beginning of the period taking
      into account dividends reinvested in accordance with the terms
      of our dividend reinvestment plan.
(5)  Calculated using the average of the ending monthly net assets for
      the respective periods.
(6)  As a business development company, we are generally required to
      maintain a ratio of 200% of total assets to total borrowings.
(7)  Asset coverage per unit is the ratio of the carrying value of our
      total consolidated assets, less all liabilities and indebtedness
      not represented by senior securities, to the aggregate amount of
      senior securities representing indebtedness. Asset coverage per
      unit is expressed in terms of dollar amounts per $1,000 of
      indebtedness.
(8)  Amounts are annualized.
(9)  Ratio of expenses to average net assets is computed using
      expenses before credit from the Adviser.
(10) Ratio of net expenses to average net assets is computed using
      total expenses net of credits to the management fee.

                   GLADSTONE INVESTMENT CORPORATION
                  CONSOLIDATED FINANCIAL HIGHLIGHTS

                                                        For the period
                                                        June 22, 2005
                                                        (Commencement
                          For the year   For the year         of
                               ended          ended     Operations) to
                          March 31, 2008 March 31, 2007 March 31, 2006
                          -------------- -------------- --------------
Per Share Data (1)
-------------------------
  Balance at beginning of
   period                 $      13.46    $      13.88   $          -
  Net proceeds from
   initial public
   offering (2)                      -               -          13.95
  Offering costs                     -               -          (0.05)

  Income from investment
   operations:
    Net investment income
     (3)                          0.79            0.67           0.36
    Realized loss on sale
     of investments (3)          (0.15)          (0.01)             -
    Net unrealized
     (depreciation)
     appreciation of
     investments (3)             (0.70)          (0.22)          0.01
                          -------------- -------------- --------------
  Total from investment
   operations                    (0.06)           0.44           0.37
                          -------------- -------------- --------------

  Total distributions (4)        (0.93)          (0.85)         (0.39)
  Shelf registration
   offering costs                    -           (0.01)             -

                          -------------- -------------- --------------
  Net asset value at end
   of period              $      12.47    $      13.46   $      13.88
                          ============== ============== ==============

  Per share market value
   at beginning of period $      14.87    $      15.10   $      15.00
  Per share market value
   at end of period               9.41           14.87          15.10
  Total Return (5)              (31.54%)          4.36%          3.39%
  Shares outstanding at
   end of period            16,560,100      16,560,100     16,560,100

  Statement of Assets and
   Liabilities Data:
-------------------------
  Net assets at end of
   period                 $206,444,949    $222,818,509   $229,841,697
  Average net assets (6)  $219,625,608    $225,642,593   $226,875,738

  Senior Securities Data:
-------------------------
  Borrowings under line
   of credit              $144,834,500    $100,000,000   $          -
  Average coverage ratio
   (7)                             243%            324%           N/A
  Average coverage per
   unit (8)               $      3,513    $      3,228            N/A

  Ratios/Supplemental
   Data
-------------------------
  Ratio of expenses to
   average net assets (9)
   (10)                           8.04%           3.10%          1.08%
  Ratio of net expenses
   to average net assets
   (9) (11)                       6.76%           2.71%          0.79%
  Ratio of net investment
   income to average net
   assets (9)                     5.94%           4.94%          3.11%

(1)  Based on actual shares outstanding at the end of the
      corresponding period.
(2)  Net of initial underwriting discount of $1.05 per share.
(3)  Based on weighted average basic per share data.
(4)  Distributions are determined based on taxable income calculated
      in accordance with income tax regulations which may differ from
      amounts determined under accounting principles generally
      accepted in the United States of America.
(5)  Total return equals the change in the market value of the
      Company's common stock from the beginning of the period taking
      into account dividends reinvested in accordance with the terms
      of our dividend reinvestment plan.
(6)  Calculated using the average of the ending monthly net assets for
      the respective periods.
(7)  As a business development company, we are generally required to
      maintain a ratio of 200% of total assets to total borrowings.
(8)  Asset coverage per unit is the ratio of the carrying value of our
      total consolidated assets, less all liabilities and indebtedness
      not represented by senior securities, to the aggregate amount of
      senior securities representing indebtedness. Asset coverage per
      unit is expressed in terms of dollar amounts per $1,000 of
      indebtedness.
(9)  Amounts are annualized.
(10) Ratio of expenses to average net assets is computed using
      expenses before credit from the Adviser.
(11) Ratio of net expenses to average net assets is computed using
      total expenses net of credits to the management fee.

Source: Gladstone Investment Corporation